Pak economy vs indian economy

[fuhrer2008]

Pakistan Must Stabilize Reserves to Avoid Rating Cut, S&P Says

By Khalid Qayum

Oct. 23 (Bloomberg) -- Pakistan, seeking assistance from the International Monetary Fund, faces a credit-rating cut if it doesn't ``stabilize'' its foreign reserves and balance of payments, Standard & Poor's said.

The nation's foreign reserves fell $570 million in the week ended Oct. 10 and have shrunk more than 74 percent in the past year to $4.3 billion. Pakistan's balance of payments deficit widened to a record $3.95 billion in the third quarter from $2.27 billion a year earlier.

``The decline in reserves is extraordinary,'' said Agost Benard, associate director at S&P in Singapore. ``If you have this kind of erosion then it is only a question of time before the rating will have to move down again.''

Central bank Governor Shamshad Akhtar is flying to Dubai today to hold talks with the IMF on a bailout to prevent Pakistan from defaulting on its debt, which is perceived by investors as the riskiest in the world after Argentina. IMF Managing Director Dominique Strauss-Kahn yesterday said the package was aimed at ``strengthening economic stability.''

``IMF loans help to stabilize things more than the actual funds that are transferred to the economy,'' Benard said in an interview in Singapore yesterday. ``It's the policy credibility that comes with it in the eyes of international investors.''

Pakistan may need as much as $10 billion from overseas donors over the next two years to avoid default, IMF Regional Director Mohsin Khan said in an Oct. 20 interview. The amount of money requested ``has yet to be determined,'' Strauss- Kahn said in yesterday's statement.

Emergency Program

The loan request from Pakistan will be processed under an emergency program announced earlier this month that gives the Washington-based fund's 185 members access to financing within 10 days rather than the usual several weeks.

Hungary, Iceland, the Ukraine and Belarus are also seeking assistance from the IMF to help weather the global financial crisis. Belarus has applied for a $2 billion loan, Interfax reported Oct. 22, and the Ukraine said this week it may sign a loan worth as much as $15 billion.

Pakistan is also expected to seek financial support from the `Friends of Pakistan' group, which is due to meet next month in the United Arab Emirates. The group, which was established last month to help Pakistan stabilize its economy, includes the U.S., U.K., China and Saudi Arabia.

Credit Rating

S&P, doubting Pakistan's ability to repay debt, cut the long-term foreign-currency rating on Oct. 6 to seven levels below investment grade, and said it may lower it again. Moody's Investors Service lowered its credit outlook to negative on Sept. 23, citing a risk of ``missed repayments.''

S&P raised Pakistan's credit rating three times between 1999 and 2004, when the South Asian country was last under an IMF program. It has lowered the rating twice this year. The IMF last rescued Pakistan from default in 1999 with a loan of about $600 million loan.

Pakistan's next interest payment on its dollar-denominated bonds is due in December and the government is scheduled to repay $500 million in February on a 6.75 percent note.

The country's first civilian government since 1999 is facing economic turmoil after the rupee plunged to an all-time low, the current-account deficit widened to a record, and inflation jumped to a 30-year high. The economic crisis mounted after the Pakistan Peoples Party-led government was paralyzed for almost six months because of political wrangling.

`Deteriorated Significantly'

Pakistan's economy has ``deteriorated significantly'' and growth may slow to a six-year low, the IMF said in an Oct. 20 report. Growth is expected to weaken to 3.5 percent in the year to June 30 from 5.8 percent last year, the IMF said.

Pakistan needs political stability and policy predictability to attract foreign investment, said Benard, who has visited the country four times since 2003. The security situation is ``getting worse,'' he said.

Military operations in Pakistan's tribal region bordering Afghanistan have triggered retaliatory attacks by militants. More than 50 people were killed in a suicide bomb attack at Islamabad's Marriott hotel on Sept. 20. The U.S. has urged Pakistan to do more to fight al-Qaeda and Taliban militants in its tribal areas, which the Bush administration says the militants are using to regroup and attack the coalition forces in Afghanistan

 

[fuhrer2008]

Moody's downgrades Pakistan rating
Source: Our monitoring desk May 22, 2008, the nation
PAKISTAN'S credit rating was cut for the first time in nine years by Moody's Investors Service, which cited 'growing economic imbalances and renewed political difficulties', reports Bloomberg.

The South Asian nation's foreign-currency sovereign rating was lowered to B2 from B1, one level below Turkmenistan and Jamaica. The ranking on locally-issued debt was also reduced to B2, Moody's said in an e-mailed statement on Wednesday.

Pakistan's seven-week-old government is fractured after coalition partner Nawaz Sharif and nine ministers quit in a dispute over the reinstatement of judges sacked by President Pervez Musharraf. Standard & Poor's cut Pakistan's rating on May 15, and the downgrade by Moody's puts the country's local-government bonds on par with Honduras and Cambodia.

"The ratings could impact Pakistan's effort to raise debt overseas or sell shares in companies," said Zaheeruddin Khalid, head of research at Al-Meezan Investment Management Ltd in Karachi, which oversees $270 million in stocks and bonds. The cut was 'expected after ratings were lowered by S&P on sliding economic indicators'.

Credit-default swaps on Pakistan's government debt increased 10 basis points to 530 at 3:30 pm in Hong Kong, according to Morgan Stanley's prices. That means it costs $530,000 a year to protect $10 million of Pakistan's debt from default for five years.

Pakistan's foreign currency rating was cut one level to B by S&P, citing government spending that's growing faster than revenue collection and political instability. The outlook is negative, S&P said.

"The outlook on the government's bond ratings and bank deposit ceilings was changed to stable from negative," Moody's said. "The stable outlook reflects the prospect of external financial support from multilateral development banks and bilateral creditors that should bolster external liquidity and offer some policy manoeuvring room."

Overseas investment in Pakistan, which reached a record $5.1 billion in the year to June 2007, has since fallen 17 per cent, according to central bank data. Foreign direct investment declined to $3.48 billion in the 10 months ended April 30 from $4.18 billion a year ago.

The rating cut may further deter overseas investors who have already retreated from the South Asian nation, buying a net $119 million of Pakistani stocks in the 10 months ended April 30, compared with purchases of $1.76 billion a year ago.

"Pakistan's fiscal and current account deficits could surpass 7 per cent of gross domestic product and are heightening inflationary pressures," Moody's said. "Substantial fiscal loosening and poor tax collection had led to a sharp erosion in the fiscal position."

 

[fuhrer2008]

Pakistan must find some economic aid from IMF speciallly when all of its freinds have declined to help or atleast they are delaying the help in such crucial scenario, even though regulation at IMF are much stiff, Btw I dont know why pakistan is so much against indian compaies to invest in pakistan when they can invite those cheapster and poor quality manufacturers like chinese who can best offer only sweatshops and are not known to be any good employers , why cant their own genetic brothers ( barring religion of 85% indian, i dont know what is diffrent beween an india or pakistani)

 

[TOPGUN]

First of all there cant be no compare here with India !!!!!!

 

[fuhrer2008]

First of all there cant be no compare here with India !!!!!!,

i am sry sir can understand ...........................

 

[su-47]

but that's what the thread is about!

 

[fuhrer2008]

I mean i can u elaborate what u said , coz i have just put a point of view that trade between india and pakistan could be better for both economies

 

[fuhrer2008]

Btw i thought i am posting on Pak economy vs indian economy forum ?,am i some where else

 

[Patriot]

Btw i thought i am posting on Pak economy vs indian economy forum ?,am i some where else

Do you really live in California?

 

[fuhrer2008]

Is that of any relevance to the topic of discussion....Mr saad..btw nice musharaf pic ...

 

[fuhrer2008]

US media predicts Pak economy collapse despite it receiving enough pledges
October 18th, 2008 - 4:13 pm ICT by ANI -

Washington , Oct 18 (ANI): Despite Pakistan receiving enough pledges from donors to avoid a possible economic default, the US media continues to predict an impending economic collapse in the recession-hit country.

Only a day ago, a excerpts of a draft report being prepared by the US intelligence agencies said that Pakistan economy was on the edge, having no money, no energy, no government.

About half a dozen reports published in the US and Western media on Friday blamed political turmoil, rising inflation, increase in oil and fuel prices and power shortages for derailing the Pakistani economy.

The Los Angeles Times published a detailed report on the financial crisis facing Pakistan . It said that the Pakistani economy has been in free fall for months. From the poorest of the poor to the wealthy elite, Pakistanis are frightened. Some say the wretched state of the economy scares them more than the threat of terrorist attacks. The government is desperate for an infusion of foreign cash; it is seeking 10 billion dollars in emergency funds from overseas to avoid default. But in light of everyone else’’s troubles, a bailout may not be forthcoming — or may not be on the scale that Pakistani officials had hoped, the Dawn quoted the LA Times report as saying.

Another report, published in London Telegraph, noted that Pakistan has managed to secure funding from other countries and international organizations to cover the 10 billion dollars needed to prevent the country from defaulting.

Several newspapers published a dispatch from Karachi , reporting that the Pakistani rupee weakened 2.78 percent to a record low of 84.40 rupees to the dollar on Friday after a 570 million dollars fall in foreign currency reserves reinforced concern over a looming balance of payments crisis.

The Pakistani rupee has lost nearly 25 per cent of its value in the last months.

Yet another report noted that Pakistan barely had enough foreign exchange reserves for about a month’’s import of essential commodities such as food and oil. (A

 

[Brown]

In 1990 pakistan economy is 1/5 of india now it is 1/9 of india what does it imply?

Who is doing better?

 

[Jihad]

US media predicts Pak economy collapse despite it receiving enough pledges
October 18th, 2008 - 4:13 pm ICT by ANI -

Washington , Oct 18 (ANI): Despite Pakistan receiving enough pledges from donors to avoid a possible economic default, the US media continues to predict an impending economic collapse in the recession-hit country.

Only a day ago, a excerpts of a draft report being prepared by the US intelligence agencies said that Pakistan economy was on the edge, having no money, no energy, no government.

About half a dozen reports published in the US and Western media on Friday blamed political turmoil, rising inflation, increase in oil and fuel prices and power shortages for derailing the Pakistani economy.

The Los Angeles Times published a detailed report on the financial crisis facing Pakistan . It said that the Pakistani economy has been in free fall for months. From the poorest of the poor to the wealthy elite, Pakistanis are frightened. Some say the wretched state of the economy scares them more than the threat of terrorist attacks. The government is desperate for an infusion of foreign cash; it is seeking 10 billion dollars in emergency funds from overseas to avoid default. But in light of everyone else’’s troubles, a bailout may not be forthcoming — or may not be on the scale that Pakistani officials had hoped, the Dawn quoted the LA Times report as saying.

Another report, published in London Telegraph, noted that Pakistan has managed to secure funding from other countries and international organizations to cover the 10 billion dollars needed to prevent the country from defaulting.

Several newspapers published a dispatch from Karachi , reporting that the Pakistani rupee weakened 2.78 percent to a record low of 84.40 rupees to the dollar on Friday after a 570 million dollars fall in foreign currency reserves reinforced concern over a looming balance of payments crisis.

The Pakistani rupee has lost nearly 25 per cent of its value in the last months.

Yet another report noted that Pakistan barely had enough foreign exchange reserves for about a month’’s import of essential commodities such as food and oil. (A

Ah..the U.S. media predicts......
Can you blame me for not continuing to read the rest of the article after reading the line above..?

 

[notorious_eagle]

Pakistan's economy can never improve unless we solve this energy crisis.

 

[Patriot]

In 1990 pakistan economy is 1/5 of india now it is 1/9 of india what does it imply?

Who is doing better?

India without any doubt.We need better politicians and economists..